Cards are King! Why Do I Need Merchant Account Services?
Credit and debit cards are some of the most common payment methods consumers use today. Even with the arrival of mobile payments, credit and debit cards still remain popular. They're convenient, easy to carry and relatively simple to obtain. Their ease of use also makes customers more likely to shop impulsively. What's more, consumers have come to expect businesses to accept card payments in some form - whether through a traditional terminal or point-of-sale device, mobile processor or online.
To get a better understanding on the widespread use of cards, the Federal Reserve periodically releases a payments study. This research is compiled every three years - the latest, comprising data from the entirety of 2015, will be released in the coming months. Meanwhile, the 2013 report found the number of credit card transactions within the U.S. alone reached 26.2 billion and debit card payments hit 47 billion during 2012.
Debit and credit cards each provide their own advantages. The former lets shoppers manage their money without going into debt, while the latter allows them to spread payments over an extended period of time. Accepting card payments is one essential way businesses ensure they meet their customer's needs.
What is a merchant account?
There are three things a business needs in order to accept card payments: a bank account, a payment processor and a merchant account. The merchant account works with card providers like MasterCard and Visa to transfer a shopper's payment into a business's bank account. There is a certain cost involved - starting a merchant account service can typically run anywhere from $50 to $200, and businesses may incur various fees as well. With the right provider, however, the benefits of being able to accept card payments far outweigh the expenses.
After a card is swiped or dipped, the payment processing provider contacts the customer's issuing bank to approve or decline the purchase. When approved, the payment goes through the processor and, after a short while, is placed into the business's merchant account via direct deposit.
How to set up a merchant account
Each merchant account provider comes with different fees, so you must carefully research various merchant services before making a commitment. Once you've narrowed down a few options, you should create a profile so potential providers understand your business needs. This profile contains information like the payment types you'd like to accept and expected volume. After that is completed, it's time for you to apply for your merchant account and consider and negotiate incoming offers.
While setting up merchant accounts requires a lot of work, many see it as an essential aspect of operating a business. Ultimately, working to accept card payments allows a business to satisfy more customers, more shoppers and handle more payments.